Appeal No. UKEAT/0474/09/RN

EMPLOYMENT APPEAL TRIBUNAL
58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS

	At the Tribunal
	On 25 February 2010
Judgment handed down on 12 March 2010

Before
HIS HONOUR JUDGE PETER CLARK
DR K MOHANTY JP
MISS S M WILSON CBE

M&L SHEET METALS LTD	APPELLANT

MR S WILLIS	RESPONDENT

Transcript of Proceedings

JUDGMENT

	APPEARANCES

For the Appellant	MR DAVID MEREDITH
(Representative)
Peninsula Business Services Ltd
Riverside
New Bailey Street
Manchester
M3 5PB	
For the Respondent	MR NICHOLAS SMITH
(of Counsel)
Instructed by:
Messrs Humphreys & Co Solicitors
14 King Street
Bristol
BS1 4EF	

SUMMARY
PRACTICE & PROCEDURE:	Reasons / Perversity
UNFAIR DISMISSAL: Constructive dismissal
STATUTORY DISCIPLINE AND GRIEVANCE PROCEDURES: Whether Infringed
HARASSMENT: Compensation

Meek compliance – perversity – constructive dismissal (see now Buckland (CA) – causation of loss following sexual orientation harassment – statutory uplift where no discussion took place at grievance meeting – costs in the EAT.

HIS HONOUR JUDGE PETER CLARK 

1.	The parties to these proceedings before the Bedford Employment Tribunal were Mr Willis, Claimant and M&L Sheet Metals Ltd, Respondent.  We shall so describe them.  This is an appeal by the Respondent against the Judgment of an Employment Tribunal chaired by Employment Judge Adamson dated 20 April 2009, in respect of which Reasons were promulgated on 17 June 2009, upholding the Claimant’s claims of constructive unfair dismissal and harassment on grounds of his sexual orientation and awarding him compensation, with interest, totalling £68,714.84

Background
2.	The Respondent carries on a sheet metal business employing upwards of 20 employees.  The Claimant commenced employment with the Respondent on 30 September 2002.  At that time his step-father, Mr Nealon, was also employed by the Respondent.  His employment terminated in late March 2004.  

3.	The Claimant’s sexual orientation is homosexual.  He first “came out” at a boxing match sponsored by the Respondent.  The date of that boxing match is significant and the evidence about that date was surprisingly diffuse.  In his witness statement in these proceedings the Claimant put the date in 2004.  In his evidence to the Employment Tribunal Mr Nealon put the boxing match in May 2003.  The Claimant, having heard Mr Nealon’s evidence, then agreed that it was in May 2003.  Mr Wright, a Director of the Respondent against whom the Claimant made allegations of bullying and sexual (orientation) harassment, had put the boxing match in December 2005 but in evidence placed it in March 2004.  Mr Newman, Workshop Director and part owner of the business, who also gave evidence and was the subject of a specific allegation of sexual harassment, told the Employment Tribunal that the boxing match took place in May 2003.  That evidence was unchallenged.  On that state of the evidence the Employment Tribunal found (paragraph 27.2) that the boxing match took place in May 2003.

4.	The significance of that date is this.  The Claimant went off sick on 6 February 2007, never to return to work for the Respondent before his resignation by letter dated 7 January 2008.  Whilst off sick he lodged a written grievance, addressed to Mr Wright and dated 24 July 2007, complaining of four incidences of bullying and six of sexual orientation harassment.  We shall return to the detail of those allegations later.  Materially, the allegations of harassment were said to have begun at the earliest on 27 march 2004, days before Mr Nealon left the employment.  However, as the Employment Tribunal record at paragraph 8, in evidence the Claimant brought forward the matters raised in his grievance to the boxing match in May 2003, as opposed to his original date of March 2004.  It was his case that the harassment commenced immediately after he came out at the boxing match.

5.	A purported grievance meeting, conducted by Mr Nash, took place on 5 September 2007.  However, the Employment Tribunal took the view that it was not a grievance meeting in any conventional form (paragraph 19).  Although Mrs Wright, the Company Secretary and wife of Mr Michael Wright had carried out some investigation and had obtained some witness statements, Mr Nash had not seen them before the 5 September meeting.  The Employment Tribunal found (paragraph 53) that Mr Nash listened to the Claimant’s grievance at that meeting, but did not discuss it with him.  He then dismissed the grievance.

6.	The Claimant appealed Mr Nash’s decision to dismiss his grievance and that appeal was handled by Mrs Smith, a freelance book-keeper who worked for the Respondent.  Whilst her handling of the matter was imperfect (paragraph 55) it was ‘within the range of reasonableness’ (paragraph 54).

7.	A grievance appeal meeting took place on 29 October 2007.  The appeal was dismissed by Mrs Smith on 29 November 2007.  We see that on 10 November 2007 Mr Nealon wrote to the Respondent (EAT bundle, p125-6) and on 14 December 2007 Jamie Allen, a former employee who left the Respondent on 26 April 2004 also provide a witness statement (p127).  We shall return to the materiality of those documents later. 

8.	The appeal having been rejected by Mrs Smith on 29 November the Claimant wrote his letter of resignation to Mr Wright on 7 January 2008 (misdated 2007).  That letter concludes (p.131):
“In view of your response to my appeal I feel I have no other choice but to resign from your firm effective from the date of this letter.  I cannot continue to work in an environment which condones such inappropriate and discriminatory behaviour towards any employee.”

9.	Meanwhile, the Claimant had lodged his first claim form ET1 at the Employment Tribunal on 9 November 2007.  He lodged a second claim on 9 January 2008.  Those two claims were combined.  A third claim, lodged on 4 April 2008, was later withdrawn.  All claims were resisted.

10.	The matter came on for Pre Hearing Review and Case Management Discussion before the Regional Employment Judge on 15 August 2008.  In her Order dated 1 September she clearly identified the individual allegations of sexual harassment raised by the Claimant at paragraph 4.3.  They number 13 in all (paragraph 4.3.12 is repeated).  

The Employment Tribunal Decision

11.	Having set out the outline story the Employment Tribunal systematically made their findings on the 13 allegations listed at paragraph 4.3 of the CMD Order.  In short, they upheld four allegations of harassment (paragraphs 36, 37, 38 and 46) and one of bullying other than by way of sexual harassment (paragraph 47).  The remaining eight allegations were found not to be proven.  Since there was no dispute but that the allegations at paragraphs 36, 37, 38 and 46 amounted to sexual harassment, if proven, the complaint of sexual harassment was upheld to that extent only.

12.	As to constructive unfair dismissal the Employment Tribunal found (paragraphs 59-60) that, since the Claimant has been continuously off work sick since February 2007 he had not waived any breach by the Respondent and that the cumulative effect of the harassment and bullying, coupled with the Respondent’s handling of his grievance broke the implied term of trust and confidence entitling the Claimant to leave in circumstances amounting to constructive dismissal.  Since no potentially fair reason for that dismissal was advanced by the Respondent the dismissal was unfair.

13.	As to remedy, the parties had jointly commissioned a medical report from Dr Verma, Consultant Psychiatrist, dated 15 November 2008.  She was not questioned by the parties on that report, nor required to give oral evidence.  Hence her report must be treated as agreed.

14.	Dr Verma found that the Claimant was suffering from depression and concluded (page 26 (192)) that that condition was directly caused by the Claimant’s treatment at work of which he complains.

15.	In these circumstances the Employment Tribunal assessed damages for psychiatric injury, based on the JSB guidelines at £12,255 and injury to feelings at £22,500, rounding up their award under both heads to £35,000.

16.	The loss of earnings claim was attributed solely to the harassment claim and not that of constructive unfair dismissal (cf. GAB Robins UK Ltd v Triggs [2008] IRLR 317 (CA)).  As to that loss (paragraph 76) the Employment Tribunal took the period of loss from 7 February 2007 until the date on which he was certified unfit for work, 31 March 2010.  That loss was attributed to his medical condition caused by the unlawful harassment.  The Employment Tribunal accepted that the Claimant would have been made redundant by the Respondent before the Employment Tribunal hearing in March and April 2009, but went on to find that but for his medical condition he would then have found alternative employment after about seven weeks.

17.	Material to this appeal are two further awards of compensation, namely (a) the cost of 15 sessions of therapy recommended by Dr Verma; £1,500 (paragraph 78) and (b) an uplift of 10 per cent in respect of the sexual harassment award (paragraphs 67-68).

18.	Finally, interest on the harassment award for injury to health and feelings (£35,000) was calculated at 6 per cent p.a. from 1 April 2004 until 7 February 2007.

The Appeal
19.	The original Notice and grounds of appeal were considered on the paper sift by HHJ McMullen QC who, for the detailed reasons given in a latter dated 10 August 2009 (p.98-100) rejected the appeal under EAT R3(7).  Dissatisfied with that opinion the Respondent exercised its right to an oral hearing under R3(10).  For that purpose Mr Meredith, who also appeared below, produced a concise skeleton argument.  The application came before Underhill P on 2 November 2009 who, for the reasons given in a Judgment delivered that day, permitted the appeal to proceed to this full hearing with both parties present, whilst expressing reservations as to the final outcome.  Following that hearing Mr Meredith lodged amended grounds of appeal (p.29-33) which form the basis of the appeal before us.  In short, the four extant grounds of appeal may be headlined as (1) Meek compliance (2) perversity (3) constructive dismissal and (4) remedy for unlawful sexual harassment (remedy).  We shall consider each ground in turn.

Meek
20.	It is well established that in giving their Reasons Employment Tribunals must tell the parties why they have won or lost, returning to Lord Bingham’s famous dictum in Meek.  Mr Meredith has also referred us to observations by HHJ Richardson in Peart v Dixons Store Retail Ltd (UKEAT/0630/04; 10 November 2004), paragraph 29; the Employment Tribunal must say whose evidence they believed and why; and the comment on reasons to be found in the judgment of Rimer LJ in Consistent Group Ltd v Kalwak [2008] IRLR 505, paragraph 52.  We in turn have reminded ourselves of the approval by Sedley LJ of a passage in the judgment of Morison P in Tchoula v Netto (6 March 1998, unreported) to be found in Anya v University of Oxford [2001] IRLR 377, paragraph 24.  We note that this Employment Tribunal specifically considered Anya (albeit on a different point) in the present case (paragraph 2.2.4).

21.	With that clear guidance in mind we turn to Mr Meredith’s challenge in his first ground of appeal.  In short, he contends that the Employment Tribunal has failed to give adequate reasons so as to explain why it upheld four of the Claimant’s allegations of harassment, whilst rejecting eight others.

22.	Having considered the way in which Mr Meredith has developed this part of the appeal and Mr Smith’s response we believe the explanation to be as follows.

23.	The onus lay on the Claimant, on the balance of probabilities, to prove the factual allegations of harassment.  It will be apparent that the original six allegations raised in the Claimant’s internal grievance letter had risen to 12 or 13 (allowing for the bullying complaints) by the time of the CMD.  All allegations were flatly denied by the alleged perpetrators.  The Employment Tribunal’s approach, we discern, was to look for some corroboration of the particular complaint.  Where there was none the allegation was rejected.

24.	Thus, looking at the four allegations upheld.  At paragraph 36, the ‘whooo’ complaint; that was supported by Mr Nealon’s evidence.  Paragraph 37, simulated oral sex with a banana, Mr Nealon had seen a similar act by Mr Wright; paragraph 38, Mr Wright grabbling the Claimant’s bottom or poking it with an object, was supported by Mr Nealon (see paragraph 31) and finally paragraph 46, Mr Newman asking the Claimant to kiss him on the lips as he got into a taxi after the firm’s Christmas party, was supported by the statement of Jamie Allen (p.127), albeit that Mr Allen was not called to give evidence.

25.	Thus, it seems to us, that the Employment Tribunal adopted a rational, plainly explicable approach to their fact-finding in relation to the individual allegations of sexual harassment.

Perversity
26.	However, that explanation for the findings adverse to the Respondent raises a further point taken by Mr Meredith which depends upon dates.

27.	He reminds us that Mr Nealon left the Respondent’s employment at the end of March 2004 but that, according to the Claimant’s written grievance, the course of sexual harassment did not begin until 27 March 2004 (and that first allegation in the grievance was not upheld).  Thus Mr Nealon could not have witnessed the incidents which he said he had seen.  Further, Jamie Allen left the employment on 26 April 2004, yet the incident with Mr Newman in the taxi was dated by the Claimant, in his grievance, on 23 December 2005.  

28.	The answer, supplied by Mr Smith, which we accept, is that at the time of the grievance the Claimant wrongly believed, based on the Employment Tribunal’s eventual finding of fact which is not challenged before us (nor could it be) that the boxing match took place not in March 2004, but in May 2003.  That correction having been made the Claimant put back the individual allegations to the actual date of the boxing match, thus bringing Mr Nealon into play.  As to Mr Allen, the Respondent was unable to show that as an ex-employee he did not attend the Christmas staff party in 2005.

29.	Mr Meredith also raised a further date; 1 December 2003, when the Employment Equality (Sexual Orientation) Regulations 2003 came into effect.  Incidents prior to that date were not capable of amounting to the statutory tort.  That is true, but the allegations upheld at paragraphs 36 and 38 were said to have involved a continuing course of conduct which stretched past the operative date of the Regulations.  The banana complaint, although post-dating Mr Nealon’s employment, was to an extent corroborated by his seeing a similar earlier incident and the Newman taxi incident occurred well after the 1 December 2003.

30.	For these reasons we are satisfied that the relevant findings adverse to the Respondent cannot be said to be unsupported by, or contrary to, the evidence before the Employment Tribunal.

Constructive Dismissal
31.	This amended grounds of appeal (No. 3) proceeds on the basis that the Claimant’s reason for resigning related solely to the treatment by the Respondent of his grievance.  That, it seems to us, is a false premise, since the Claimant in the last paragraph of his resignation letter, which we have earlier set out, complains both of the course of treatment amounting to sexual harassment as well as bullying and the treatment of his grievance.

32.	However, even if we concentrate on the cause of the internal grievance, Mr Meredith’s submission founders on the rock of the very recent decision of the Court of Appeal in Buckland v Bournemouth University [2010] EWCA Civ 121, 24 February 2010, to which we referred the parties.

33.	In Buckland at the EAT level [2009] ICR 1042, I respectfully declined to follow the approach of earlier decisions in Abbey National v Fairbrother [2007] IRLR 320 (Lady Smith presiding) and Claridge v Daler Romney Ltd [2008] ICR 1267 (Elias P) where the range of reasonable response test, applicable to the question of reasonableness under s98(4) Employment Rights Act 1996, was to varying degrees imported into the question as to whether an employer was in breach of the implied term of trust and confidence.  It seems that my analysis was preferred to that found in the earlier cases (per Sedley LJ, paragraphs 22, 27).  Thus, in the present case, the finding by the Employment Tribunal (paragraph 54) that the appeal meeting held by Mrs Smith was within the range of reasonableness (see Fairbrother) does not assist Mr Meredith in this case.

34.	Further, in Buckland the CA corrected our approach below in holding that the repudiatory breach there had been cured before acceptance of the breach by the employee such that constructive dismissal was not made out.  As Jacob LJ put it firmly in Buckland (paragraph 52), once the employer is in repudiatory breach he can seek to persuade the employee to affirm the contract, but the employee’s option to leave and claim constructive dismissal is not removed by the employer ‘curing’ the breach before acceptance by the employee.

35.	In these circumstances, given the Respondent’s acceptance that Mr Nash failed to deal properly with the Claimant’s grievance, the fact that Mrs Smith carried out a reasonable, albeit imperfect appeal process does not cure the breach so as to preclude the Claimant from relying upon it.

36.	Finally, Mr Meredith sought to raise a different argument in oral submissions, not covered by his amended ground of appeal (No. 3) in relation to delay by the Claimant amounting to waiver of the breach.  Leaving aside the pure ‘pleading’ point we are not persuaded that there is any basis in law for interfering with the clear findings by the Employment Tribunal at paragraph 59, in an approach consistent with that of Slynn P in Bashir v Brillo [1979] IRLR 205.  The Claimant’s absence on sick leave after 6 February 2007 was inconsistent with his affirming the contract, particularly in the light of his grievance.

Remedy
37.	First, causation.  Mr Meredith submits that the Employment Tribunal, in awarding loss of earnings between February 2007 and March 2010, gave no consideration to the question as to whether the loss was attributable to the harassment found.  We do not follow that submission in the light of the clear connection made in the unchallenged report of Dr Verma to which we have referred.  Further, the probability of redundancy by the Respondent does not, save for a 7 week period of notional unemployment, break the chain of causation because, but for the harassment and its medical consequences the Claimant would have found alternative employment following redundancy.  Due to his attributable condition he will not do so before March 2010, so the Employment Tribunal found.

38.	Next, the 10 per cent uplift.  Mr Meredith has referred us to the Court of Appeal decision in Selwarajan v Wilmot [2008] IRLR 824.  That case was concerned with the general requirement as to delay under paragraph 12 of Schedule 2 to the Employment Act 2002 and whether excessive delay amounted to non-completion of the statutory disciplinary procedure triggering automatically unfair dismissal under s98A(1) ERA.  In overruling a line of EAT authority the Court of Appeal held that it did not.

39.	That is not the present case, where the Employment Tribunal found that the Respondent was in breach of the mandatory provisions to discuss the employee’s grievance found at paragraph 7(1) of the Second Schedule (Reasons, paragraph 67).  On the facts, no discussion took place (see paragraph 5 above).  In these circumstances the breach was made out and a 10 per cent uplift wholly justified.

40.	Finally, we should mention the Employment Tribunal’s approach to the calculation of interest.  The relevant time frame ran from 1 April 2004.  Mr Meredith submits that in selecting that date the Employment Tribunal’s reasoning was internally inconsistent with a finding that the harassment found pre-dated Mr Nealon leaving the Respondent’s employment.  That appeared to be a better point than it turned out to be after Mr Smith told us, without demur from Mr Meredith, that his instructing solicitor, Mr Burbidge, who conducted the Claimant’s case below had suggested that as a starting date and Mr Meredith did not disagree.

Conclusion
41.	It follows, having considered the various ways in which the appeal is put, with the advantage of submissions on behalf of the Claimant which were not available to the President at the R3(10) hearing, that no error of law is made out.  Consequently the appeal fails and is dismissed.

Costs
42.	After announcing the result of the appeal at the end of the oral hearing, with our reasons to follow as they now do, Mr Smith applied for the Claimant’s costs in the appeal.

43.	The circumstances in which costs may be ordered in this Tribunal are circumscribed.  In light of the President’s permission to proceed at the R3(10) stage, whilst recognising that, amongst other things, the Employment Tribunal’s reasons may appear sufficient after full argument (as has turned out to be the case), we cannot characterise the Respondent’s conduct in pursuing this appeal as unreasonable.  Consequently, we dismissed that application.